Despite great advances in enterprise management software during the past several decades, there remains a significant opportunity in the design of production and material planning systems. After a discussion of a major technical flaw in enterprise resource planning/material requirement planning (ERP/MRP) systems, we outline advanced planning in literature and selected software products, with focus on the notion of planned lead times and limited capacity. We then describe ‘Capacitated ERP’–a simple variation of production and material requirements planning of components that takes into account resource capacity before exploding requirements to lower level components (upstream supply tiers). The model is presented with an example at the component planning level in a declarative (as opposed to a procedural) format, consequently facilitating implementation in a spreadsheet environment, which is often used by small and midsized companies. An outline showing how to integrate this component into a typical Supply Chain Management-software environment for such firms is included. Finally, we generate initial insights gained from our proposed method applied to an aircraft engine supplier.